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Chris SkidmoreChris
Skidmore is Member of Parliament for Kingswood and a member of the Education
Select Committee. Follow Chris
 on Twitter.

Figures
released this week revealed the huge scale of six figure salaries amongst NHS
managers and consultants. More than 7,800 were paid more than £100,000, with a
third of them on salaries larger than the Prime Minister’s.

In
a time of public sector pay restraint these figures highlight the need for
reform of pay on the NHS, particularly as they have increased at nearly half of
the trusts which were surveyed. This contrasts sharply with the broader outlook
on pay, which has changed more positively over the last year. From 2010/11 to
2011/12 total staff costs have fallen by £1.5 billion, with the cost per head
reduced by an average of £215. 

Staff
costs account for a huge proportion of NHS budgets. According to the King’s
Fund, NHS spending on staff, at £42.8 billion, accounted for 64 per cent of the
operating costs of Primary Care Trusts, NHS and foundation trusts. As we face
up to an ageing population and fiscal reality this is clearly an area that
should be targeted for savings, and it can’t be right that managers at the top
are protected.


While
no managers should be immune from the pay restraint being shown by the rest of
the public sector, this is particularly true of those who have been part of
failing trusts. Shockingly, the number of staff being paid more than £100,000
at Mid Staffordshire rose from 79 to 85 last year, in spite of the huge concern
and scandal surrounding the trust which has now been put into administration by
Monitor.

This
reward for failure cannot be allowed to continue. We need a system where there
are strong incentives to make sure that treatment is delivered in a way which
is cost-effective and doesn’t come with a thick layer of expensive management.

One
of the most worrying changes over the last year has been the fact that spending
on care in hospitals is rising much faster than spending on primary care. From
2010/11 to 2011/12 there was a real terms increase in spending on hospital care
of 1.2 per cent compared to a 1.2 per cent real terms decrease in spending on
care in the primary setting. This is exactly the opposite of what needs to
happen; where it is more efficient care should be shifted away from hospitals
and delivered locally.

Payment
by results, used to incentivise doctors to carry out care at a local level,
could go a significant way towards making care more cost-effective and
stripping out management. An example of how this has been used to deliver high
quality care can be found in the US, where HealthCare Partners is paid a fixed
fee by the Government Medicare programme to accept the risk of the care costs
of an elderly patient. In order to avoid the high cost of hospitalising
patients HealthCare Partners provides high-quality local care and preventative
medicine which would be unaffordable if it were being paid on a per-procedure
basis. The longer term benefit of high-quality local care is internalised by
the system, and experienced by both patients and taxpayers.

The
benefits have not gone completely ignored in the UK. Closer to home, the Torbay
Care Trust – often associated with innovative practice – offered GP practices
bonuses if they achieved targets which included reducing hospital referral
rates.

They
have, however, not been recognised in the same scale. The key to the
effectiveness of the Medicare provision by HealthCare Partners is that all the
financial risk is borne by the primary care provider. Within the British commissioning structure, larger rewards would need to be
offered for reducing referrals in order to drive a similar improvement in
primary-level provision.

Such
a radical approach would tackle the root cause of high management spending: too
much is being spent in the wrong care settings. With the right incentives we
can deal with the unreasonably large sums being paid to managers, but more
importantly we could also improve the quality and cost-effectiveness of care.

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